What Caused The Bears To Bleed The Stock Market By Over 900 Points On Dalal Street?

Indian benchmark stock market indices saw a significant and extended decline on Thursday, 26th October, marking the longest losing streak in eight months.

As the stock market closed on Thursday, 26th October, the S&P BSE Sensex dropped by 900.91 points to 63,148.15, while the NSE Nifty 50 fell to 18,857.25, shedding 246.90 points.

The broader domestic market indices, including Nifty Midcap 100 and Smallcap 100, could not escape this downturn as well as both registered declines of over 2 percent. Adding insult to injury, India VIX, a measure of market volatility, surged by 10 percent, reflecting heightened tension on Dalal Street.

Stock Market Bleeds...

Several sectoral indices experienced substantial losses, with prominent sectors like Nifty Bank, Nifty Financial Services, and Nifty IT falling between 1.3 percent and 1.7 percent. Nifty Media and Nifty Realty bore the brunt of the downturn, with both sectoral indices declining over 2.4 percent.

Selective Resilience Among Blue-Chip Stocks

While most blue-chip stocks faced a downturn, Axis Bank and HCLTech emerged as notable gainers on the benchmark indices.

According to media reports, market analysts had foreseen this correction, given the consistent decline observed in recent trading sessions.

What made the stock market bears roar so hard?

The significant market downturn is attributed to a combination of factors, including global market weakness, concerns about rising US Treasury yields, the monthly F&O expiry, and escalating geopolitical tensions.

IT stocks were particularly affected due to concerns of potential interest rate increases, driven by the rise in US Treasury yields. Disappointing Q2 results from major IT firms also contributed to subdued market sentiment.

In early trade, Tech Mahindra, a prominent IT company, experienced a significant decline of more than 3 percent. This drop followed the company's announcement of its most substantial decrease in net profit in over 16 years. The company's disappointing financial results have raised concerns among many brokerages regarding Tech Mahindra's future growth prospects.

The company's disappointing financial results have raised concerns among many brokerages regarding Tech Mahindra's future growth prospects.

The decline in Adani Group stocks followed a report suggesting that the National Financial Reporting Authority (NFRA), India's accounting regulator, was scrutinizing one of the group's auditors. All 10 listed companies under the Adani Group saw a decline.

The decline of financial heavyweights Bajaj Finance and Bajaj Finserv, which both fell by nearly 3 percent led to a sharp downturn in the Nifty Financial Services index.

With a decline in Global stocks, led by the US, Indian market sentiments further witnessed a cascading effect. As the 10-year bond yield in the US is approaching 5 percent, it has potentially raised concerns with foreign investors who are likely to engage in selling.

The ongoing Israel-Hamas conflict raised concerns about potential global growth derailment and its impact on high oil-importing nations like India.